China

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• Chinas WTO Commitment on Banking Liberalization
• Foreign banks will be allowed to conduct all
  types
• of foreign exchange transactions with foreign
  clients
• immediately upon entry and with Chinese clients
  within
• one year of entry in designated cities
• Foreign banks must be allowed to make corporate
  loans
• in local currency within two years of entry and
  deal with
• individual Chinese customers five years after
  entry
• Furthermore, foreign banks will be allowed to
  engaged in
• joint ventures upon WTO entry by China, full
  foreign
• ownership will be permitted within five years of
  entry

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• Chinas Four State-owned Commercial Banks
• Bank of China
• China Construction Bank
• Industrial and Commercial Bank of China
• Agriculture Bank of China

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Loan and Deposit Distribution in Chinas Banking
System, 2000
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Problems of Chinas Domestic Banking System
Notes The official number on NPL ratio for the
four SOCBs was 26.2 per cent at the beginning of
2002.
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Major Measures in financial restructuring

• Setting December 31st 2003 as the baseline, use
  the original paid-up capital, retained profits,
  reserves and all shareholders equity of Bank of
  China (BOC) and China Construction Bank (CCB) to
  write-off past loss and 50 of loans
  classified as doubtful
• Invest 45bn US dollars into BOC and CCB, 15bn
  into ICBC
• Sold Doubtful loans to AMCs at half of the
  price
• Retain profits form 2004 in the two banks as bad
  debts provision
• Issue RMB66bn subordinated debt as Tier 2 capital

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Shareholding structure of BOC
Strategic investors
Other shareholders
SAFE
Bank of China
Subsidiaries like Bank of China (HK)
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Shareholding structure of CCB
SAFE
10
Other shareholders
CCB Investment
85
Institutions like CICC
China Construction Bank
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Share of General Trade and Processing Trade in
Chinas Total Exports 1989-2005
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The Share of Chinas General Trade and Processing
Trade Exports by the Ownership of Enterprises,
2004
General Trade Exports
Processing Trade Exports
P 2.9
C 2.5
State- Owned 13.5
Private 22.9
State-owned 41.7
Sino-foreign cooperation 25.5
Solely foreign-invested 55.7
Collective 9.4
Solely foreign- invested 10.7
Sino- foreign Cooperation 15.2
Note Processing Trade includes both
pure-assembly and import-and-assembly processing.
Under pure-assembly regime a foreign
buyer supplies a plant in China with inputs and
hire the plant to process them into finished
goods while under import-and-assembly regime the
plant in China imports inputs, processes them,
and sells the processed goods to a foreign buyer.
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The Share of Primary Goods and Manufactured Goods
in Chinas Exports 1988-2005

Year
13
Sweden 25, India 32.5, United States 40.8, China
44.7, Brazil 59.1
Gini Coefficient for Chinas Income Distribution